IDC: revenue rises for largest IT services vendors

The 30 largest IT services vendors in the world collectively increased their revenue 10.9 percent to US$209.2 billion in 2003 over 2002, healthy growth driven primarily by sales of outsourcing services, an IDC analyst said Tuesday.

The outsourcing segment saw its revenue grow fastest at 17.9 percent, as enterprises continue to delegate to IT services providers IT tasks that aren't part of their core business, said Alexander Motsenigos, an IDC analyst.

"There is a lot of activity in outsourcing, especially in business process outsourcing," he said, referring to a type of outsourcing which involves performing not only IT functions but also tasks such as payroll processing and inventory management.

These 30 vendors, which accounted for 55 percent of the market's total 2003 revenue of US$380 billion, saw their project-oriented revenue (such as consulting and system integration) and their support/training revenue (such as IT skills training and hardware/software support) grow at the slower paces of 7.2 percent and 6 percent, respectively, he said. Those two areas and outsourcing are the three categories into which IDC segmented IT services revenue for the purpose of this study, he said.

In previous years, IDC has done this research, but focusing it on the top 20 IT services vendors, measured by revenue. In 2003, the collective revenue of the 20 IT service providers grew 8.7 percent over 2002, he said.

The fastest growing services vendors in 2003 were Northrop Grumman Corp. with revenue growth of 76 percent, CGI Group Inc. (44 percent), Dell Inc. (28 percent), Deutsche Telekom AG (25 percent) and EMC Corp. (21 percent), he said. Meanwhile, IBM Corp. led all IT services vendors in revenue in 2003, followed by Electronic Data Systems Corp. (EDS), Fujitsu Ltd., Hewlett-Packard Co. and Accenture Ltd., he said.

A sign that the momentum in the market is building is the fact that contract signings of the 10 largest vendors grew a combined 19 percent to US$145 billion in 2003 over 2002, the first year-to-year increase in contract bookings since 2000, he said.

In the fourth quarter, the 30 largest IT services vendors generated collectively US$54.7 billion in revenue, 9.7 percent more than in 2002's fourth quarter. The Asia-Pacific region registered the largest revenue growth with 13 percent, followed by the Americas with 10 percent and Europe, the Middle East and Africa with 4 percent, he said.

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